The Politics of the Carbon Economy

Climate politics is increasingly conducted by, through and for markets. Business and financial actors have become central actors in the construction and management of an elaborate and increasingly intermeshed system of climate governance. Central to these are a series of markets, constructed to facilitate investment in carbon abatement and to create incentives for states and firms to limit their carbon emissions. Emissions trading systems, the Kyoto flexibility mechanisms, voluntary carbon offset projects, and projects by investors to get other companies to disclose their carbon emissions are the key elements in this governance system. All amount to the creation of what is sometimes called the carbon economy; they all subject climate change to a market logic. They do this by allocating property rights to carbon emissions, by getting firms to incorporate their carbon emissions into their routine calculations of profit and risk and by subjecting firms to a logic of transparent information through which investors and consumers can make decisions through the market that are compatible with the goal of reducing greenhouse gas emissions.